Some exceptions to Nemo dat quod non habet by Palak Agarwal at LexCliq

Buyer has continued in possession of goods bought

At the point when the purchaser has ownership of the merchandise and exchanges them to a subsequent purchaser, the nemo dat law is a special case.

Where a purchaser has bought or consented to purchase products and claims them with the seller’s authorization, Section 25 of the Sale of Goods Act and the fairly more extensive Section 9 of the Factors Act 1889 give that when the merchandise are offered to an outsider, a subsequent purchaser acting in accordance with some basic honesty will take title to the merchandise. Accordingly, this part applies when a purchaser chooses to buy products however doesn’t yet have title to them, and he offers them to a second purchaser who will at that point take good title. Example -A bought a car from the plaintiff and paid with a cheque, despite the fact that he was granted ownership, it was decided that the property would not be transferred until the cheque was honoured. The cheque had dishonoured, but A had resold the car to B, who had purchased it unaware of the situation. It was resold to the defendant by B. The plaintiff attempted to reclaim the vehicle from him. The court would rule that A, the original purchaser, was in possession of the property with the owner’s permission. As a result, he could pass a good title to B, who would then pass it on to the defendant. As a result, the defendant was allowed to keep the car.

Mercantile agents have made dispositions.

If a mercantile agent has the authority to sell the goods and does so, there is no problem because, in general, an agent with the authority to sell will convey a good title.

The problem occurs when the mercantile agent disposes of the goods without authorization. Example- D, the car’s owner, instructed agent W to sell his vehicle for at least Rs 50,000. However, W misappropriated the money by selling the car to G for Rs 40,000. G behaved in good conscience, oblivious to the above instruction to the agent. G obtained a good title to the car, and the real owner, D, is unable to reclaim the vehicle from G.


Sale by Joint Owner

“If one of the joint owners of goods has sole ownership of them with the consent of the other joint owners, the property in the goods is transferred to someone who buys them from that joint owner in good faith and does not have warning that the seller lacks authority to sell at the time of the contract of sale.”

Example – Co-owners of certain products were T, W, and S. With the permission of W and S, T was in possession of those goods. T sold those products to F, who purchased them in good faith and without being informed that T was not allowed to sell them. F obtained a good title to the goods in this situation, and W and S are unable to reclaim the goods from F.


Unpaid Seller does Resale – Section 54 (3)

“If an unpaid seller has exercised his right of lien or stoppage in transit and the buyer does not pay him, the seller has the right to resell the goods after giving the buyer notice. If such a notion is not given, the seller is not entitled to recover any loss from the buyer if the goods sell for less than the contract price, nor will he maintain the value if the goods sell for more.”

Section 176 of the Indian Contract Act – Sale by Pawnee

If the pawnor fails to pay the debt, the pawnee has the option of either suing him for the debt or selling the goods pledged after giving the pawnor fair notice of the transaction.


By Palak Agarwal at LexCliq




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